A country has a comparative advantage
A)in producing milk if its cows are heavy milk producers.
B)in producing mobile phones if it has a big timber industry.
C)in producing those products or services that make intense use of those resources in which it has a relative abundance.
D)in producing those products or services that make intense use of those resources for which it has the lowest domestic demand.

Question

Quizplus · Accepted Answer

Comparative advantage is about producing goods at a lower opportunity cost than other countries. This means that a country has a comparative advantage in producing those products or services that make intense use of those resources in which it has a relative abundance. For example, a country with a lot of fertile land and a high supply of labor can produce agricultural products like wheat or rice at a lower cost than a country with less fertile land and a lower supply of labor. Therefore, option C is the correct answer.

A Country Has a Comparative Advantage